European Close Market Briefing – 27/06/2017 – by Arjun Lakhanpal

June 27, 2017 by

In European Equity Markets stocks fell on Tuesday as a decline in auto stocks after Germany’s Schaeffler cut its profit outlook and disappointment over a failed buyout of Stada offset gains among basic resources firms and Spain’s Bankia. The pan-European STOXX 600 index was down 0.8 percent, while Germany’s DAX was 0.8 percent weaker. Autos were the biggest pain point in Europe, falling 1.7 percent after German auto parts supplier Schaeffler slashed its profit guidance on growing price pressures and high costs. Schaeffler’s shares lost nearly 12 percent, while shares in peer Continental fell 3.4 percent. Gains among mining firms Anglo American, ArcelorMittal and Rio Tinto helped prop up the basic resources sector, which gained 1.1 percent.

In Currency Markets the U.S. dollar hit a more than nine-month low against the euro on Tuesday after the head of the European Central Bank opened the door to steps that might begin to reduce the central bank’s emergency stimulus to the economy. The euro’s gains briefly elevated it more than 1 percent against the greenback to $1.1304 in the U.S. morning session, marking its strongest level since Sept. 8, 2016. The Japanese yen weakened 0.52 percent versus the greenback at 112.44 per dollar. Sterling was last trading at $1.278, up 0.47 percent on the day. The Bank of England raised banks’ capital requirements and warned about levels of credit growth in pockets of the economy.

In Commodities Markets  oil prices rose about 2 percent on Tuesday and hit a one-week high, boosted by a weaker dollar, short covering and expectations that crude inventories in the United States may decline for the third consecutive week.  Brent crude futures gained 2.2 percent to $46.84 per barrel. U.S. crude futures were up about 2 percent, at $44.30 per barrel. Spot gold rose 0.5 percent to $1,250.30 per ounce. It hit a near six-week low of $1,236.46 on Monday. Among other precious metals, silver rose 0.3 percent to $16.61 an ounce, while palladium was flat at $864.97 per ounce. Platinum rose 0.7 percent to $918.75, recovering from Monday’s six-week trough.

In US Equity Markets  the S&P 500 and the Dow Jones Industrial Average pared early losses in late morning trading on Tuesday as bank and consumer stocks rose on robust consumer confidence data, while the Nasdaq Composite was dragged lower by a fall in technology shares. The Dow Jones Industrial Average was up 0.1 percent, at 21,430.73, the S&P 500  was up 0.01 percent, at 2,439.43. The Nasdaq Composite index was down 0.25 percent, at 6,231.66. The technology index fell 0.39 percent due to a decline in the shares of Apple, Microsoft and Alphabet. Alphabet fell 1 percent to $962.64 after EU antitrust regulators hit the tech giant with a record $2.7 billion fine.

In Bond Markets U.S. Treasury yields rose on Tuesday, in sympathy with European government debt weakness, after European Central Bank President Mario Draghi fueled expectations that the ECB is closer to announcing a reduction of stimulus. Benchmark 10-year notes were last down 13/32 in price to yield 2.18 percent, up from 2.14 percent late on Monday. The Treasury yield curve continued to flatten, with the gap between five-year notes and 30-year bonds falling to a low of 92.70 basis points.